Hi guys, to carry out buying and selling transactions in the crypto world, we can go through two types of exchanges (where crypto is traded), namely:

  • CEX = Centralized Exchange - Binance, Coinbase, Bybit, Kucoin, Tokocrypto, Indodax, Huobi, Pintu, Rekenkunku, Gateio, etc.

  • DEX = Decentralized Exchange - Pancakeswap, Uniswap, Sushiswap, Curve, Balancer, 1inch, dkk

    CEX vs DEX

Two types of crypto trading platforms that differ in the way they operate and architecture. Following are the differences between CEX and DEX:

  • Control Center

    • CEX is a trading platform that is centralized and managed by a specific entity or company. They have full authority to control user assets and transactions.

    • DEX is a decentralized trading platform that operates on the blockchain. They are not controlled by a single entity, but rather by protocols and smart contracts that execute automatically.

  • Security

    • CEX has complete control over users' assets, including their private keys. However, this also means users must trust and rely on the security of the platform.

    • DEX assets remain under the user's control via their private keys. This provides a higher level of security as there is no risk of centralization or unauthorized access to user assets.

  • Compliance and Verification

    • CEXs often require a complicated registration process and ask users to provide personal information as well as go through an identity verification (KYC) process.

    • DEXs have no KYC requirements and provide greater anonymity to users. This allows users to trade without having to reveal their identity.

  • Liquidity

    • CEXs often offer higher liquidity because there are many participants and large trading volumes.

    • DEX, liquidity can be lower as it depends on trading activity on the underlying blockchain. However, some DEXs have introduced technologies such as liquidity aggregators and bridge protocols to increase their liquidity.

  • Fund Control:

    • CEX requires users to deposit their funds into a wallet controlled by the platform. This gives the platform control over user funds and requires trust in the platform.

    • DEX, users do not need to deposit their funds into the platform. Instead, they trade directly from their own wallets, maintaining complete control over their assets.

  • Openness and Transparency:

    • DEXs offer a high level of transparency because all transactions are executed on the blockchain, which can be viewed and verified by anyone.

    • CEXs, on the other hand, can have a lower level of transparency because they can control and manipulate their trading data.

Both types of platforms have their respective advantages and disadvantages.

  • CEXs are usually easier to use, offer higher liquidity, and support features such as leverage trading.

  • DEX, on the other hand, offers higher security, anonymity and greater openness.